Words from the Rising Republics

October 10, 2011

DOUBLE DIP

The assignment of a mortgage and note already in default permits YOUR BANK to realize "credit enhancement" profits while also allowing the YOUR BANK to institute foreclosure.  This is a “double dip” for YOUR BANK and, of course, illegal. What Bank has been cut off from doing this?

 

When an individual purchases a home with a mortgage, a promissory note is signed.  The loan-originating company (YOUR MORTGAGE COMPANY) sells the note to an investment banker or hedge fund and collects the full value of the note upfront.  A copy of the note is created and stamped "Paid in Full." The loan-originating company has no right to foreclose because it received all its money when it sold the note.

Before the repeal of the Glass-Stegall Act and before greed took control of the market, the holder of the note (i.e., a Commercial Banker; not an Investment Banker) would store the note in a vault. If someone defaulted on their loan, the Commercial Bankers would produce the genuine original note to prove that the bank owned the note and/or that the Bank had bought the note from a loan-originating company.  

But the repeal of the Glass-Stegall Act and greed changed all that.

Instead of vaulting the original note, those notes were "re-packaged" with thousands of other notes into what became known as CDOs or Credit Defaults Obligations.  There were low-risk CDO mortgage packages, moderate-risk CDO mortgage packages and high-risk CDO mortgage packages.

The low-risk mortgage packages were easy to sell to conservative investors looking for long-term income.  Most of those original packages are still valid and producing income. 

However, the moderate-risk and high risk-mortgages were not easy to sell.  To resolve this, these mortgages were re-packaged by mixing them with low-risk mortgages, and sold to conservative investors.   The same mortgage could have been re-packaged and sold a dozen times. 

Remember, the investment banker paid only one time for the instrument and only has the right to place the note in one package.  Repackaging was a highly illegal use of mortgages.

In order to hide the trail of their activities, investment bankers destroyed the notes so no one could trace which CDO packages the note was actually put in.  But since the notes are destroyed, ownership is impossible to establish.

Who Really Owns Your Loan?

When borrowers default on their loans, investment bankers want to foreclose quickly so they can retain some value to their mutual funds.  They quickly sell the mortgage to a foreclosure bank.  They can't sell the note because it was destroyed. This leaves the foreclosure bank vulnerable because it does not have proof that it owns the note.

“An obligor is not obliged to pay the instrument if the person seeking enforcement of the instrument does not have rights of a holder in due course and the obligor proves that the instrument is a lost or stolen instrument.” UCC Negotiable Instruments § 3-305 Defenses and Claims in Recoupment.

Remember, the only thing that the borrower signed is a note.  The borrower did not sign the right to repackage the mortgage.  The only asset is the note that represents the actual property. 

And even though the investment banker has a record of monthly payments that he sells to the foreclosure bank, this can not be sufficient to establish actual ownership.  The Rules of Civil Procedure requires the instrument to be filed a minimum of ten days before a court hearing, which is a must before a judge can issue eviction orders.

When a borrower is foreclosed upon, the foreclosure represents a lawsuit.  The foreclosure bank brings a lawsuit against the borrower for failure to pay.  The bank is the plaintiff and the borrower is the defendant. 

Since the borrower is the defendant, he has the right to call for "discovery."   Discovery is the pre-trial litigation procedure in which both the plaintiff and defendant requests relevant information and documents from each other.  Discovery generally includes depositions, requests for inspection and document production.  In the case of foreclosure, the defendant requires the plaintiff to produce the note.

The problem for the foreclosing bank is the bank does not have the note at all because it was destroyed to stop the audit trail, or it says "paid in full" -- in which case, nothing is owed to the bank.

If the note has been modified in any way (even with a stamp on it), the defendant can say, "That is not the note I signed; produce the original note to prove you own it." The defendant can produce a copy of his original note that he signed.  The bank needs to produce one just like it to prove ownership, not one that says "paid in full."

 

The loan modification or the foreclosure sale bought the “Genuine Original Promissory Note” (not a copy), which must be filed with the clerk of the court.  The note can be bought only from the true holder in due course.  Treble damages must be paid to the homeowner by any entity advancing a wrongful foreclosure (the source of funds is called “a replevin bond”, which is treble damages). It is a thief who attempts to sell a house while keeping the note or if the thief has no “GENUINE ORIGINAL PROMISSORY NOTE”, or if he has an unrecorded stolen note, he still pays you treble damages for his fraud or wrongful foreclosure.

The “Genuine Original Promissory Note” is treated in commerce the same as a check.  The only difference is that each endorsement in an assignment must be recorded at the courthouse.  MERS stole approximately two point four billion dollars from the nation’s courthouses, and rendered all such assignments unenforceable, so says the Kansas State Supreme Court.

 

The swamps are populated with corrupt and greedy people who are not members of the body of Christ, are not the temple of the Holy Spirit, and are not heirs of eternal glory.  With them, God is not revered or feared.  He does chasten His children.  Hopefully, they are to be chastened with His word, not His rod. If you suffer with Him, you will reign with Him. Things are not required to enjoy His presence.

 

“A copy will do in my court.”  Such action is usury.  God is not deceived.  Read Ezekiel 18:13 to determine the answer to the question, “shall he then live?” God can not be bought off with stimulus funds.

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